Miller, CPA, is engaged to compile the financial statements of Web Co., a nonissuer, in conformity with the income tax basis of accounting. If Web's financial statements do not disclose the basis of accounting used, Miller should:

Question

Quizplus · Accepted Answer

Choice "A" is correct. If financial statements have been compiled on a basis other than GAAP, and the client makes no disclosures in the financial statements to that effect, the accountant should disclose the basis of accounting in the accountant's compilation report. Choice "B" is incorrect. Under the circumstances, the accountant need only make reference to the other basis of accounting used to compile the financial statements; special labeling of the financial statements is not required. Choice "C" is incorrect. A special report is not warranted in the circumstances. Choice "D" is incorrect. It is not necessary to withdraw from the engagement.

Miller, CPA, Is Engaged to Compile the Financial Statements of Web